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Loan Against Property Vs PersonaL Loan In Bangalore – Know Which Is The Best

Bangalore, the technology hub of India, is definitely a city with lots of opportunities. From career to business, this is a metro that can promise a bright future to everyone. Hence, it is not unusual to find people shifting their base here from any corners of India. There are many who prefer to buy a property in Bangalore. This is when application for loan becomes a necessity. But the question is what should be the kind of loan you can go for? Here is a comparative study between loan against property and personal loan to help you in making the decision.

Loan against Property

Loan against property or LAP is a type of loan, which is disbursed against mortgage of property. The loan amount depends on the market value of the property that is usually around 40% to 60%. This comes under secured loan category. The borrower has to keep one of his or her asset as a security against the loaned amount. The purpose of taking loan can be for the expansion of business, education, medical or even buying another property.

Personal Loan

As far as the personal loan is concerned, this falls under the category of unsecured loan. The borrower does not have to put up any collateral or security as a guarantee for repayment of the amount taken. But the interest rate is very high. So, if you have applied for personal loan in Bangalore, you need to pay a certain amount per month until the debt has been cleared along with the high interest rate.

Comparative Approach

Loan Against Property

Personal loan

The amount loaned, in case of LAP, depends on the value of the property that has been kept mortgage with the financial organization.  Personal loan is given out without any safekeeping and it can be taken for personal use.
The interest rate is low and the range falls in between 12% to 16%., which makes the Equated Monthly Installment (EMI) low for LAP. The interest rate is usually high and it lies in between 16% – 21%. Hence, the Equated Monthly Installment (EMI) for personal loans is more.
The cost of the property and income or earning determines the highest loan eligibility for LAP.  Maximum loan eligibility for personal loan is determined mostly by earning of the borrower.
The tenure of loan is 15 years. The tenure for this loan is  only 5 years


So, if you are planning to buy a property in Bangalore, loan against property is a better option because of its secured nature. Even if you fail to pay back the amount on time, the financial organization will possess the mortgaged property. But that will not put you in a crisis state. So, look into all the aspects before borrowing loan.  

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Priya Rai is a loan consultant.